Will Dongwon Metal’s stock shine in 2023?


Will Dongwon Metal’s stock shine in 2023?

Dongwon Metal, an auto parts company, is a small-sized company ranked 1055th on the KOSPI. In the fourth quarter of 2022, operating cash flow increased to 12.4 billion won, but net income recorded a deficit of -200 million won. Nevertheless, Dongwon Metal’s stock price rose 35.5% year-on-year to 1,015 won as of January 12, 2023. Let’s take a look at the factors behind Dongwon Metal’s stock price rise and future prospects.

Increased sales due to increased demand for auto parts

Dongwon Metal’s main sales composition is 92.85% for auto parts and 7.15% for steel pipes. Auto parts produce parts such as engines, transmissions, and bodies, and trade with domestic and foreign automakers. In the fourth quarter of 2022, auto parts sales increased by 11.6% year-on-year to 132.3 billion won. This is analyzed as the result of the recovery of domestic and foreign automobile markets and the expansion of exports.

Improved operating margin through efficient cost management

Dongwon Metal faced a cost burden due to rising raw material prices and labor costs. However, Dongwon Metal reduced costs by improving productivity and managing inventory. As a result, the operating margin increased by 0.9%p year-on-year to 4.9%.

Enhanced growth potential through expansion of new businesses

Dongwon Metal also operates a steel pipe business in addition to auto parts. The steel pipe business manufactures steel pipes used in various fields such as construction, shipbuilding, and energy. Dongwon Metal is working hard to strengthen the competitiveness of its steel pipe business by investing in new facilities and developing technologies. In addition, Dongwon Metal is participating in the development of hydrogen fuel cell-related parts, which is expected to be a future growth engine.

Dongwon Metal improved its operating performance by increasing demand for auto parts and reducing costs. In addition, Dongwon Metal is pursuing expansion of new businesses such as steel pipe business and hydrogen fuel cell-related parts development. Dongwon Metal’s efforts and growth potential are recognized and its stock price is expected to continue to rise.

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